[Federal Register Volume 77, Number 121 (Friday, June 22, 2012)]
[Rules and Regulations]
[Pages 37554-37558]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-15310]


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FEDERAL DEPOSIT INSURANCE CORPORATION

12 CFR Part 380

RIN 3064-AD84

DEPARTMENT OF THE TREASURY

31 CFR Part 149

RIN 1505-AC36


Calculation of Maximum Obligation Limitation

AGENCY: Federal Deposit Insurance Corporation; Departmental Offices, 
Department of the Treasury.

ACTION: Final rule.

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SUMMARY: The Federal Deposit Insurance Corporation (the ``FDIC'') and 
the Departmental Offices of the Department of the Treasury (the 
``Treasury'') (collectively, the ``Agencies'') are issuing the final 
rule (``Final Rule'') to implement applicable provisions of the Dodd-
Frank Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank 
Act'').\1\ The Final Rule governs the calculation of the maximum 
obligation limitation (``MOL''), as specified in the Dodd-Frank Act. 
The MOL limits the aggregate amount of outstanding obligations that the 
FDIC may issue or incur in connection with the orderly liquidation of a 
covered financial company.
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    \1\ Dodd-Frank Wall Street Reform and Consumer Protection Act, 
Public Law 111-203, 12 U.S.C. 5301 et seq. (2010).

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DATES: The effective date of the Final Rule is July 23, 2012.

FOR FURTHER INFORMATION CONTACT: 

FDIC

    Arthur D. Murphy, Senior Financial Analyst, Division of Finance 
(703) 562-6177 or [email protected]; Henry R.F. Griffin, Assistant 
General Counsel, Legal Division (703) 562-6404 or [email protected]; or 
Randy W. Thomas, Counsel, Legal Division (703) 562-6454 or 
[email protected].

Treasury

    Lance Auer, Deputy Assistant Secretary (Financial Institution 
Policy), at (202) 622-1262; Monique Rollins, Senior Policy Advisor 
(Office of Capital Markets), at (202) 622-1745; Peter A. Bieger, 
Assistant General Counsel (Banking and Finance), at (202) 622-0480; and 
Steven D. Laughton, Senior Counsel, Office of General Counsel, at (202) 
622-8413.

SUPPLEMENTARY INFORMATION: 

I. Background

The Dodd-Frank Act

    Title II of the Dodd-Frank Act establishes an Orderly Liquidation 
Authority (``OLA'') to resolve a large interconnected financial company 
upon a determination that its failure and resolution under otherwise 
applicable law would have serious adverse effects on financial 
stability in the United States and the use of OLA would avoid or 
mitigate such adverse effects. Under the process set forth in the Dodd-
Frank Act, certain designated Federal agencies,\2\ on their own 
initiative or at the request of the Secretary of the Treasury 
(``Secretary''), may recommend that the Secretary appoint the FDIC as 
receiver of a financial company. Any written recommendation from the 
designated Federal agencies that the Secretary should appoint the FDIC 
as receiver for a financial company must include a number of specific 
findings, which are enumerated in section 203(a)(2) of the Dodd-Frank 
Act.\3\ Then,

[[Page 37555]]

based on the written recommendation of the appropriate agencies, the 
Secretary, in consultation with the President, must determine whether 
the conditions in section 203(b) of the Dodd-Frank Act have been 
satisfied so that the Secretary can seek the appointment of the FDIC as 
receiver for the financial company.\4\ In making that determination, 
the Secretary must document any determination and retain such 
documentation. This procedure is very similar to the way that systemic 
risk determinations are made under section 13 of the Federal Deposit 
Insurance Act (the ``FDIA'').\5\ Under section 201(a)(8) of the Dodd-
Frank Act, a ``covered financial company'' is a ``financial company'' 
\6\ for which a determination has been made pursuant to section 203(b) 
of the Dodd-Frank Act but does not include an insured depository 
institution.
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    \2\ The Board of Governors of the Federal Reserve System 
(``FRB'') and the Securities and Exchange Commission (``SEC'') will 
make the recommendation if the company or its largest U.S. 
subsidiary is a broker or a dealer. The FRB and the Director of the 
Treasury's Federal Insurance Office will make the recommendation and 
provide affirmative approval, respectively, if the company or its 
largest U.S. subsidiary is an insurance company, and the FRB and the 
FDIC will make the recommendation in all other cases. In cases 
involving the FRB and FDIC, the recommendation must be approved by 
at least \2/3\ of the members of the FRB then serving and at least 
\2/3\ of the members of the FDIC Board of Directors then serving.
    \3\ Section 203(a)(2) of the Dodd-Frank Act provides that all 
written recommendations from the designated Federal agencies to the 
Secretary must include the following:
    (1) An evaluation of whether the financial company is in default 
or in danger of default;
    (2) A description of the effect that the default of the 
financial company would have on financial stability in the United 
States;
    (3) A description of the effect that the default of the 
financial company would have on economic conditions or financial 
stability for low income, minority, or underserved communities;
    (4) A recommendation regarding the nature and the extent of 
actions to be taken under Title II of the Dodd-Frank Act regarding 
the financial company;
    (5) An evaluation of the likelihood of a private sector 
alternative to prevent the default of the financial company;
    (6) An evaluation of why a case under the Bankruptcy Code is not 
appropriate for the financial company;
    (7) An evaluation of the effects on creditors, counterparties, 
and shareholders of the financial company and other market 
participants; and
    (8) An evaluation of whether the company satisfies the 
definition of a financial company under section 201 of the Dodd-
Frank Act.
    \4\ Section 203(b) of the Dodd-Frank Act requires the Secretary 
of Treasury to determine that:
    (1) The financial company is in default or in danger of default;
    (2) The failure of the financial company and its resolution 
under otherwise applicable Federal or State law would have serious 
adverse effects on financial stability in the United States;
    (3) No viable private sector alternative is available to prevent 
the default of the financial company;
    (4) Any effect on the claims or interests of creditors, 
counterparties, and shareholders of the financial company and other 
market participants as a result of actions taken under Title II of 
the Dodd-Frank Act is appropriate, given the impact that any action 
taken under Title II of the Dodd-Frank Act would have on financial 
stability in the United States;
    (5) Any action under section 204 would avoid or mitigate such 
adverse effects, taking into consideration the effectiveness of the 
action in mitigating potential adverse effects on the financial 
system, the cost to the general fund of the Treasury, and the 
potential to increase excessive risk taking on the part of 
creditors, counterparties and shareholders in the financial company;
    (6) A Federal regulatory agency has ordered the financial 
company to convert all of its convertible debt instruments that are 
subject to the regulatory order; and
    (7) The company satisfies the definition of a financial company 
under section 201.
    \5\ 12 U.S.C. 1823(c)(4).
    \6\ Section 201(a)(11) of the Dodd Frank Act defines the term 
``financial company'' to mean any company that:
    (A) Is incorporated or organized under any provision of Federal 
law or the laws of any State;
    (B) Is--
    (i) A bank holding company, as defined in section 2(a) of the 
Bank Holding Company Act of 1956 (12 U.S.C. 1841(a));
    (ii) A nonbank financial company supervised by the FRB;
    (iii) Any company that is predominantly engaged in activities 
that the FRB has determined are financial in nature or incidental 
thereto for purposes of section 4(k) of the Bank Holding Company Act 
of 1956 (12 U.S.C. 1843(k)) other than a company described in clause 
(i) or (ii); or
    (iv) Any subsidiary of any company described in any of clauses 
(i) through (iii) that is predominantly engaged in activities that 
the FRB has determined are financial in nature or incidental thereto 
for purposes of section 4(k) of the Bank Holding Company Act of 1956 
(12 U.S.C. 1843(k)) (other than a subsidiary that is an insured 
depository institution or an insurance company); and
    (C) Is not a Farm Credit System institution chartered under and 
subject to the provisions of the Farm Credit Act of 1971, as amended 
(12 U.S.C. 2001 et seq.), a governmental entity, or a regulated 
entity, as defined under section 1303(20) of the Federal Housing 
Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 
4502(20)).
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    Once the Secretary makes the determination, the Secretary can seek 
the appointment of the FDIC as receiver of the covered financial 
company. If the board of directors (or similar governing body) of the 
company consents to the appointment, the Secretary shall appoint the 
FDIC as receiver. If the company's governing body does not consent, 
section 202 of the Dodd-Frank Act requires the Secretary to petition 
the United States District Court for the District of Columbia for an 
order authorizing the Secretary to appoint the FDIC as receiver. In 
determining whether to grant the petition, the court will determine 
whether two of the Secretary's seven determinations--that the covered 
financial company is in default or in danger of default and that it 
meets the definition of financial company under Title II--are arbitrary 
and capricious.\7\ If the court upholds the two reviewable 
determinations of the Secretary, the court will issue an order 
authorizing the Secretary to appoint the FDIC as receiver. If the court 
does not make a determination within twenty-four hours of receiving the 
Secretary's petition, then the appointment of the FDIC as receiver 
takes effect by operation of law.
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    \7\ Dodd Frank Act, section 202(a)(1)(A)(iii).
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    The OLA in the Dodd-Frank Act is intended as a limited exception to 
bankruptcy or other applicable insolvency laws for purposes of ensuring 
that the resolution of a failing non-depository financial company does 
not have serious adverse effects on U.S. financial stability. Section 
204(a) of the Dodd-Frank Act expressly provides that the purpose of the 
OLA is to provide the means ``to liquidate failing financial companies 
that pose a significant risk to the financial stability of the United 
States in a manner that mitigates such risk and minimizes moral 
hazard.'' Section 214(a) expressly provides that ``[a]ll financial 
companies put into receivership under this title shall be liquidated. 
No taxpayer funds shall be used to prevent the liquidation of any 
financial company under this title.'' Moreover, section 214(b) provides 
that ``[a]ll funds expended in the liquidation of a financial company 
under this title shall be recovered from the disposition of assets of 
such financial company, or shall be the responsibility of the financial 
sector, through assessments.'' Finally, section 214(c) provides that 
``[t]axpayers shall bear no losses from the exercise of any authority 
under this title.''
    To achieve the orderly liquidation of financial companies, the FDIC 
is given broad authority under the Dodd-Frank Act to: transfer assets 
or liabilities to a bridge financial company; operate or liquidate 
businesses; sell assets; and resolve the liabilities of a covered 
financial company, just after the FDIC's appointment as receiver or as 
soon as conditions make this appropriate.\8\ This authority enables the 
FDIC to act immediately to sell any assets or liabilities of the 
covered financial company to another entity, or, if that is not 
possible or consistent with maximizing the value of the assets of the 
covered financial company, to transfer assets and liabilities to a 
bridge financial company established by the FDIC and sell the assets or 
liabilities over time while maintaining critical functions. Oftentimes, 
in administering a receivership, it is necessary to continue key 
operations, services, and transactions that will maximize the value of 
the firm's assets and avoid a disorderly collapse in the marketplace.
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    \8\ Section 210 of the Dodd-Frank Act prescribes the FDIC's 
powers and duties once it is appointed as receiver of a covered 
financial company, including, inter alia, its powers and duties to: 
(1) Succeed to all rights, titles, powers and privileges of the 
covered financial company and its assets, and of any stockholder, 
member, officer or director of such company; (2) take over the 
assets and operate the covered financial company with all the powers 
of the shareholders, members, directors and officers, and conduct 
all business of the covered financial company; (3) liquidate the 
covered financial company through the sale of assets and liabilities 
or the transfer of assets and liabilities to a bridge financial 
company, as provided under section 210(h) of the Dodd-Frank Act; (4) 
merge the covered financial company with another company or transfer 
assets or liabilities; (5) pay valid obligations that come due, to 
the extent that funds are available; (6) exercise subpoena powers; 
(7) use private sector services to manage and dispose of assets; (8) 
terminate rights and claims of stockholders and creditors (except 
for the right to payment of claims consistent with the priority of 
claims provision); and (9) determine and pay claims. However, a 
receivership of an insurance company would generally be conducted in 
accordance with state law.

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[[Page 37556]]

    Section 210(n) of the Dodd-Frank Act establishes an Orderly 
Liquidation Fund (``OLF'') in the U.S. Treasury that will be available 
to the FDIC to carry out its responsibilities as receiver of a covered 
financial company and pay the costs of actions authorized under Title 
II of the Dodd-Frank Act. These responsibilities include: the orderly 
liquidation of covered financial companies; the payment of 
administrative expenses; and the payment of principal and interest by 
the FDIC on obligations issued under section 210(n)(5) of the Dodd-
Frank Act. The OLF will be comprised of amounts received by the FDIC, 
including: the proceeds of obligations issued to Treasury pursuant to 
section 210(n)(5); assessments received under section 210(o); interest 
and other earnings from investments; and repayments to the FDIC by 
covered financial companies.\9\
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    \9\ Dodd Frank Act, section 210(n)(2).
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    In order for the FDIC to fulfill its obligations as receiver of a 
covered financial company, it may be necessary for the FDIC to borrow 
funds from the Treasury. Under section 210(n)(5) of the Dodd-Frank Act, 
the FDIC is authorized to issue obligations to Treasury upon the FDIC's 
appointment as receiver, and Treasury may purchase any such 
obligations, ``upon such terms and conditions as to yield a return at a 
rate determined by the Secretary, taking into consideration the current 
average yield on outstanding marketable obligations of the United 
States of comparable maturity, plus an interest rate surcharge to be 
determined by the Secretary, which shall be greater than the difference 
between--(i) the current average rate on an index of corporate 
obligations of comparable maturity; and (ii) the current average rate 
on outstanding marketable obligations of the United States of 
comparable maturity.'' Section 210(n)(9) of the Dodd-Frank Act provides 
that the FDIC must develop an Orderly Liquidation Plan (``OLP'') that 
is acceptable to the Secretary for each covered financial company for 
which the FDIC is appointed receiver, prior to funds in the OLF being 
made available to the FDIC with regard to such covered financial 
company. The FDIC may amend any OLP at any time with the concurrence of 
the Secretary. Section 210(n)(9) further requires that a mandatory 
repayment plan between the FDIC and Treasury be agreed to and in effect 
before Treasury may provide certain amounts to the FDIC within the 
limits defined in section 210(n)(6)(B) of the Dodd-Frank Act.
    The Maximum Obligation Limitation (``MOL''), as set forth in 
section 210(n)(6) of the Dodd-Frank Act, limits the aggregate amount of 
outstanding obligations that the FDIC may issue or incur in connection 
with the orderly liquidation of a covered financial company. 
Specifically, the statute provides as follows:
    The [FDIC] may not, in connection with the orderly liquidation 
of a covered financial company, issue or incur any obligation, if, 
after issuing or incurring the obligation, the aggregate amount of 
such obligations outstanding under this subsection, for each covered 
financial company would exceed--
    (A) an amount that is equal to 10 percent of the total 
consolidated assets of the covered financial company, based on the 
most recent financial statement available, during the 30-day period 
immediately following the date of appointment of the [FDIC] as 
receiver (or a shorter time period if the [FDIC] has calculated the 
amount described under subparagraph (B)); and
    (B) the amount that is equal to 90 percent of the fair value of 
the total consolidated assets of each covered financial company that 
are available for repayment, after the time period described in 
subparagraph (A).

    On November 25, 2011, the Agencies issued a notice of proposed 
rulemaking regarding the calculation of the MOL as specified in section 
210(n)(6) of the Dodd-Frank Act (76 FR 72645, November 25, 2011). The 
purpose of the proposed rule (the ``Proposed Rule'') was to define 
certain key terms and describe the manner in which the FDIC would 
calculate the MOL in the event that one or more covered financial 
companies are placed into receivership. The notice of proposed 
rulemaking published in the Federal Register requested comments on all 
aspects of the Proposed Rule as well as comments relating to certain 
specific questions. The comment period ended on January 24, 2012.

II. Summary of Comments on the Proposed Rule

    The Agencies received two comments in response to the Proposed 
Rule. The first commenter was supportive of the Proposed Rule, noting 
that it is in close alignment with the statutory language of the Dodd-
Frank Act. The commenter agreed with the proposed definitions, 
particularly the definitions of ``fair value'' and ``obligation.'' 
Further, this commenter observed that during extended periods of 
economic distress it may not be possible to credibly or reasonably 
determine ``fair value'' for some assets and that the Agencies should 
consider appropriate contingencies and responses. The Agencies 
acknowledge this point and believe that the definition of ``fair 
value'' in the Final Rule provides the FDIC with sufficient flexibility 
to implement the rule in a wide range of economic and market 
environments, including during periods of severe economic distress. 
This approach will enable the determination of the fair value of assets 
to be adapted to a variety of circumstances that may be encountered but 
that cannot be foreseen at present.
    The second commenter questioned why brokered deposits are 
immediately paid off by the FDIC and suggested that brokered deposits 
be transferred to the acquiring institution as a zero-cost deposit. 
This comment addresses issues which are outside the scope of the 
Proposed Rule.

III. The Final Rule

A. Overview

    Section 210(n)(7) of the Dodd-Frank Act requires the Agencies, in 
consultation with the Financial Stability Oversight Council (``FSOC''), 
to jointly prescribe regulations governing the calculation of the MOL. 
In accordance with this section, the Agencies consulted with the FSOC, 
considered the two comments received, and have decided to adopt 
regulations that closely follow the statutory language for calculating 
the MOL, while defining certain terms referenced in the statute. 
Because the two comments received did not suggest any changes to the 
regulatory text, the Final Rule is identical to the Proposed Rule. The 
terms in the Final Rule are defined solely for the purpose of 
calculating the MOL and are not applicable to any other statutory or 
regulatory requirements.

B. Section-by-Section Analysis of the Final Rule

    Definitions. In the Proposed Rule, the Agencies defined terms that 
are necessary to calculate the MOL. The Proposed Rule defined the terms 
``fair value,'' ``most recent financial statement available,'' 
``obligation'' and ``total consolidated assets of each covered 
financial company that are available for repayment.'' The Dodd-Frank 
Act does not define these terms. The Agencies did not receive any 
comments that requested changes to the definitions. As a result, the 
definitions in the Final Rule are unchanged.
    Only one comment was received on these definitions. That comment 
agreed with the proposed definitions, particularly the definitions of 
``fair value'' and ``obligation.'' That comment also observed that it 
may not be possible to reasonably determine fair values during a 
systemic crisis and

[[Page 37557]]

recommended that the Agencies prepare appropriate contingencies. The 
Agencies believe that the comment is generally in accord with the 
discussion of ``fair value'' in the Proposed Rule insofar as it noted 
the FDIC's authority to conduct an orderly liquidation in order to 
maximize the value of assets of a covered financial company over a 
three-to five-year period. As noted above, the Agencies believe that 
the definition of ``fair value'' in the Final Rule provides the 
Agencies with sufficient flexibility to implement the rule in a wide 
range of economic and market environments, including during periods of 
severe economic distress. This approach will enable the determination 
of fair value of assets to be adapted to a variety of circumstances 
that may be encountered but that cannot be foreseen at present.
    Maximum Obligation Limitation. In the Proposed Rule, the Agencies 
closely followed the statutory language in section 210(n)(6) of the 
Dodd-Frank Act for calculating the MOL. The Agencies did not receive 
any comments that suggested changes to the MOL. As a result, the MOL in 
the Final Rule is unchanged.

IV. Regulatory Analysis and Procedure

A. The Paperwork Reduction Act

    The Final Rule provides, in part, the manner in which the Agencies 
will implement the maximum obligation limitation for FDIC borrowings 
from Treasury to fund the Orderly Liquidation Fund in the event that 
one or more covered financial companies are placed into receivership. 
The Final Rule will not involve any new collections of information 
pursuant to the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). 
Consequently, no information collection was submitted to the Office of 
Management and Budget for review. No comments were received in 
connection with the Paperwork Reduction Act analysis published as part 
of the Proposed Rule.

B. The Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act (5 
U.S.C. 605(b)), the Agencies hereby certify that the Final Rule will 
not have a significant economic impact on a substantial number of small 
entities and therefore a regulatory flexibility analysis is not 
required. The Final Rule governs the manner in which the FDIC will 
calculate the MOL for obligations incurred or issued by the FDIC in 
connection with the orderly liquidation of a covered financial company 
under Title II of the Dodd-Frank Act. Under Small Business 
Administration (SBA) size standards defining small entities, financial 
companies are generally considered small entities if their annual 
receipts do not exceed $7 million or their total assets do not exceed 
$175 million.\10\ The Agencies do not expect that the OLA in the Dodd-
Frank Act will be used to resolve financial companies that qualify as 
small entities, because the failure of such companies would be unlikely 
to have serious adverse effects on financial stability in the United 
States. No comments were received in connection with the Agencies' 
Regulatory Flexibility Act analysis published as part of the Proposed 
Rule.
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    \10\ 13 CFR 121.201.
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C. Plain Language

    Each Federal banking agency, such as the FDIC, is required to use 
plain language in all proposed and final rules published after January 
1, 2000. 12 U.S.C. 4809. In addition, in 1998, the President issued a 
memorandum directing each agency in the Executive branch, such as 
Treasury, to use plain language for all new proposed and final 
rulemaking documents issued on or after January 1, 1999. The Agencies 
sought to present the Proposed Rule in a simple and straightforward 
manner. The Agencies received no comments on the use of plain language, 
and the Final Rule is identical to the Proposed Rule.

D. Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct Treasury to assess costs 
and benefits of available regulatory alternatives and, if regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety 
effects, distributive impacts, and equity). Executive Order 13563 
emphasizes the importance of quantifying both costs and benefits, of 
reducing costs, of harmonizing rules, and of promoting flexibility. 
This Final Rule has been designated a ``significant regulatory action'' 
although not economically significant, under section 3(f) of Executive 
Order 12866. Accordingly, the rule has been reviewed by the Office of 
Management and Budget.

E. Small Business Regulatory Enforcement Fairness Act

    The Office of Management and Budget has determined that the Final 
Rule is not a ``major rule'' within the meaning of the relevant 
sections of the Small Business Regulatory Enforcement Fairness Act of 
1996 (SBREFA) (5 U.S.C. 801, et seq.).
    As required by SBREFA, the FDIC and Treasury will file the 
appropriate reports with Congress and the Government Accountability 
Office so that the final rule may be reviewed.

List of Subjects

12 CFR Part 380

    Accounting, administrative practice and procedure, finance, and 
loan programs.

31 CFR Part 149

    Accounting, administrative practice and procedure, finance, and 
loan programs.

Federal Deposit Insurance Corporation

Authority and Issuance

    For the reasons stated above, the Board of Directors of the Federal 
Deposit Insurance Corporation amends part 380 of title 12 of the Code 
of Federal Regulations as follows:

PART 380--ORDERLY LIQUIDATION AUTHORITY

0
1. The authority citation for part 380 continues to read as follows:

    Authority: 12 U.S.C. 5301 et seq.


0
2. Add Sec.  380.10 to read as follows:


Sec.  380.10  Maximum Obligation Limitation

    (a) General rule. The FDIC shall not, in connection with the 
orderly liquidation of a covered financial company, issue or incur any 
obligation, if, after issuing or incurring the obligation, the 
aggregate amount of such obligations outstanding for each covered 
financial company would exceed--
    (1) An amount that is equal to 10 percent of the total consolidated 
assets of the covered financial company, based on the most recent 
financial statement available, during the 30-day period immediately 
following the date of appointment of the FDIC as receiver (or a shorter 
time period if the FDIC has calculated the amount described under 
paragraph (a)(2) of this section); and
    (2) The amount that is equal to 90 percent of the fair value of the 
total consolidated assets of each covered financial company that are 
available for repayment, after the time period described in paragraph 
(a)(1) of this section.
    (b) Definitions: For purposes of paragraph (a) of this section:
    (1) The term ``fair value'' means the expected total aggregate 
value of each asset, or group of assets that are managed within a 
portfolio, of a covered financial company on a consolidated

[[Page 37558]]

basis if such asset, or group of assets, was sold or otherwise disposed 
of in an orderly transaction.
    (2) The term ``most recent financial statement available'' means a 
covered financial company's:
    (i) Most recent financial statement filed with the Securities and 
Exchange Commission or any other regulatory body;
    (ii) Most recent financial statement audited by an independent CPA 
firm; or
    (iii) Other available financial statements. The FDIC and the 
Treasury will jointly determine the most pertinent of the above 
financial statements, taking into consideration the timeliness and 
reliability of the statements being considered.
    (3) The term ``obligation'' means, with respect to any covered 
financial company:
    (i) Any guarantee issued by the FDIC on behalf of the covered 
financial company;
    (ii) Any amount borrowed pursuant to section 210(n)(5)(A) of the 
Dodd-Frank Act; and
    (iii) Any other obligation with respect to the covered financial 
company for which the FDIC has a direct or contingent liability to pay 
any amount.
    (4) The term ``total consolidated assets of each covered financial 
company that are available for repayment'' means the difference 
between:
    (i) The total assets of the covered financial company on a 
consolidated basis that are available for liquidation during the 
operation of the receivership; and
    (ii) To the extent included in (b)(4)(i) of this section, all 
assets that are separated from, or made unavailable to, the covered 
financial company by a statutory or regulatory barrier that prevents 
the covered financial company from possessing or selling assets and 
using the proceeds from the sale of such assets.

Department of the Treasury

Authority and Issuance

0
For the reasons set forth in the preamble, Treasury amends Title 31, 
Chapter I of the Code of Federal Regulations by adding part 149 to read 
as follows:

PART 149--CALCULATION OF MAXIMUM OBLIGATION LIMITATION

Sec.
149.1 Authority and purpose.
149.2 Definitions.
149.3 Maximum obligation limitation.

    Authority:  31 U.S.C. 321 and 12 U.S.C. 5390.


Sec.  149.1  Authority and purpose.

    (a) Authority. This part is issued by the Federal Deposit Insurance 
Corporation (FDIC) and the Secretary of the Department of the Treasury 
(Treasury) under section 210(n)(7) of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act (Act).
    (b) Purpose. The purpose of this part is to issue implementing 
regulations as required by the Act. The part governs the calculation of 
the maximum obligation limitation which limits the aggregate amount of 
outstanding obligations the FDIC may issue or incur in connection with 
the orderly liquidation of a covered financial company.


Sec.  149.2  Definitions.

    As used in this part:
    Fair value. The term ``fair value'' means the expected total 
aggregate value of each asset, or group of assets that are managed 
within a portfolio of a covered financial company on a consolidated 
basis if such asset, or group of assets, was sold or otherwise disposed 
of in an orderly transaction.
    Most recent financial statement available. (1) The term ``most 
recent financial statement available'' means a covered financial 
company's--
    (i) Most recent financial statement filed with the Securities and 
Exchange Commission or any other regulatory body;
    (ii) Most recent financial statement audited by an independent CPA 
firm; or
    (iii) Other available financial statements.
    (2) The FDIC and the Treasury will jointly determine the most 
pertinent of the above financial statements, taking into consideration 
the timeliness and reliability of the statements being considered.
    Obligation. The term ``obligation'' means, with respect to any 
covered financial company--
    (1) Any guarantee issued by the FDIC on behalf of the covered 
financial company;
    (2) Any amount borrowed pursuant to section 210(n)(5)(A) of the 
Act; and
    (3) Any other obligation with respect to the covered financial 
company for which the FDIC has a direct or contingent liability to pay 
any amount.
    Total consolidated assets of each covered financial company that 
are available for repayment. The term ``total consolidated assets of 
each covered financial company that are available for repayment'' means 
the difference between:
    (1) The total assets of the covered financial company on a 
consolidated basis that are available for liquidation during the 
operation of the receivership; and
    (2) To the extent included in paragraph (1) of this definition, all 
assets that are separated from, or made unavailable to, the covered 
financial company by a statutory or regulatory barrier that prevents 
the covered financial company from possessing or selling assets and 
using the proceeds from the sale of such assets.


Sec.  149.3  Maximum obligation limitation.

    The FDIC shall not, in connection with the orderly liquidation of a 
covered financial company, issue or incur any obligation, if, after 
issuing or incurring the obligation, the aggregate amount of such 
obligations outstanding for each covered financial company would 
exceed--
    (a) An amount that is equal to 10 percent of the total consolidated 
assets of the covered financial company, based on the most recent 
financial statement available, during the 30-day period immediately 
following the date of appointment of the FDIC as receiver (or a shorter 
time period if the FDIC has calculated the amount described under 
paragraph (b) of this section); and
    (b) The amount that is equal to 90 percent of the fair value of the 
total consolidated assets of each covered financial company that are 
available for repayment, after the time period described in paragraph 
(a) of this section.

    Dated at Washington, DC, this 23rd day of April 2012.

    By order of the Board of Directors.

Federal Deposit Insurance Corporation.
Robert E. Feldman,
Executive Secretary.
    Dated: June 15, 2012.

    By the Department of the Treasury.
Rebecca H. Ewing,
Executive Secretary.
    Dated: June 15, 2012.

[FR Doc. 2012-15310 Filed 6-21-12; 8:45 am]
BILLING CODE 6714-01-P; 4810-25-P